Why the STRC Buyback Triggered Concern
The biggest issue is the nature of STRC itself.
Unlike traditional debt, which is issued with a fixed repayment value, STRC is a floating-rate preferred security. That means there is no contractual reason for it to trade back to $100. Even though it was originally issued at that level, the price is not guaranteed to return.
Because of this, spending $25 million simply to lift the market price by roughly 2.3% was viewed as an inefficient use of corporate capital. In his view, the purchase did not improve the business itself. Instead, it merely created a short-term bounce in the chart.
This Move Feels Different…
Previous fundraising rounds were generally easy to understand. Capital was used to:
- Buy more Bitcoin.
- Improve the company’s dividend coverage.
- Reduce outstanding debt.
This latest transaction looked very different.
Instead of increasing Bitcoin exposure, part of the proceeds appeared to be redirected into STRC. That shift led the commentator to question whether Strategy was now trying to actively defend the preferred share price. He wondered if the company was doing this instead of focusing on its core treasury strategy.
The $100 Problem
A major part of the criticism revolves around investor psychology.
Many buyers entered STRC near $100 and have since watched the security fall sharply. Since the instrument is not redeemable at its issue price, there is little fundamental justification for the market to value it there again.
Even if STRC recovers toward $95-$96, heavy selling could emerge as early investors attempt to recover their losses. That overhang, according to the commentator, makes a sustained return to $100 increasingly difficult. This is true regardless of how many shares the company repurchases.
Why Future Buybacks May Not Help
Another concern came after reports suggested Strategy could continue buying STRC.
- First, continued STRC buybacks may only create short-term price rallies, without addressing the underlying valuation concerns.
- Second, the analyst questioned whether selling MSTR shares at around a 1x multiple to net asset value (MNAV) to support STRC is the best use of funds. He argued that shareholders could receive greater long-term value if the proceeds were instead used to expand the company’s Bitcoin holdings.
- Moreover, STRC could eventually drift back toward the mid-$80 range, making recent gains difficult to sustain.
Looking ahead, the analyst said investors should seek clearer answers from Strategy’s management on why supporting STRC is being prioritized over buying more Bitcoin. Investors should also ask whether these capital allocation decisions genuinely enhance long-term shareholder value.
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